09-18-2008, 04:17 AM
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#2
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Senior Member
Join Date: Aug 2007
Location: Okolona, Ky.
Posts: 6,142
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Dont worry, be happy - stay the course...
Bloomberg Warns Of "Next Wave" Crisis
WASHINGTON, Sept. 17, 2008 - More Financial Pain Possible If Foreign Entities Stop Buying U.S. Debt, Says NYC Mayor
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New York Mayor Michael Bloomberg warned Wednesday a "next wave" of financial pain may come from overseas if foreign entities stop buying U.S. debt. The billionaire mayor spoke before an audience at Georgetown University, telling them it's not clear who is going to continue buying U.S. debt as financial firms try to cope with a crisis of confidence on Wall Street.
The financial markets have undergone a tumultuous last week: Investment bank Lehman Brothers filed for bankruptcy and later sold off its North American trading division to British bank Barclays PLC; Insurance giant AIG needed an $85 billion bailout from the U.S. government in order to stay afloat; and investment firm Merrill Lynch sold itself to Bank of America. The mayor is scheduled to meet Thursday morning with Treasury Secretary Hank Paulson and Securities and Exchange Commission Chairman Chris Cox.
Before becoming mayor, Bloomberg made a fortune by launching a financial information company that bears his name, and he has more credibility than most politicians on economic matters. Bloomberg said he was concerned that the credit crisis in the United States may scare off foreign investors that, until now, have been willing to buy debt that the U.S. uses to maintain a deficit. "It's not clear who's going to be buying our debt," said Bloomberg. "It may very well be that the next wave is going to come back and bite us."
The mayor, a Democrat-turned-Republican-turned independent, regularly criticizes both parties, the Congress, and the White House for what he says is their lack of foresight. He said the current economic crisis is the latest example of the same problem. "We have on both sides of the aisle, on both ends of Pennsylvania Avenue, thrown caution to the wind. We pay lip service to responsibility," he said, as he sat onstage in an armchair, fielding questions from Georgetown President Jack DeGioia. Bloomberg had originally planned to give a speech about the economy, but amid the fast-moving events on Wall Street, he scrapped the speech and went with a question-and-answer session instead.
More Bloomberg Warns Of "Next Wave" Crisis, More Financial Pain Possible If Foreign Entities Stop Buying U.S. Debt, Says NYC Mayor - CBS News
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See also:
Who'll Bail Out Uncle Sam?
WASHINGTON, Sept. 17, 2008 - The National Debt, And Who Picks Up the Tab
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The federal government may seem like a financial knight on a white steed riding to the rescue of big companies in trouble. The irony is that Uncle Sam’s got enormous money problems of his own. The government is far deeper in debt than any of the companies it’s bailing out. As of this morning, the national debt stands at over $9.634 trillion. That’s trillion - with a "T." And that’s nearly $4 trillion more than it was on the day President Bush took office. This year alone, it’s costing taxpayers more than $230 billion just to pay the interest on the national debt.
And it’s getting bigger every day thanks to the relentless rush of the government spending money it has to borrow. The federal deficit for the fiscal year ending September 30 is expected in the range of $400 billion - close to the all-time high. In fact, the government doesn’t have the $85 billion needed to bailout insurance giant American International Group. The treasury department announced this morning it would auction new debt to raise funds for the Federal Reserve’s rescue plan for AIG. The Fed didn’t need President Bush’s permission for the bailout, but he supports the action.
“The president’s economic advisors had determined that some of these companies were so big - that to allow them to fail would have caused even greater harm and damage to the economy,” explained Press Secretary Dana Perino at today’s White House briefing. And despite the government’s intervention to keep a distressed company from failing, Perino insists “the free market is alive and well.”
“We have systems in place here in our country to be able to deal with shocks to the system like this,” she said. The rescue plan means taxpayer funds are being put at risk, but Perino said “taxpayers might be harmed even worse” if the collapse of a major company caused broader economic damage. She declined to repeat President Bush’s oft-stated assurance that the “fundamentals” of the economy are strong. But she said the economy has the strength to deal with the strains it’s now facing. “We’ll weather the storm and be better for it,” she asserted. But where does the federal government go when it needs a bailout? Taxpayers need only look in the mirror.
Who'll Bail Out Uncle Sam?, CBS' Mark Knoller On The National Debt, And Who Picks Up the Tab - CBS News
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Another nightmare on Wall Street: Dow down 450
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